Comment: total reform is needed to safeguard vulnerable investors from mini-bonds

Like many manmade ills, mini-bonds were created for positive reasons. Who could fault companies such as John Lewis and Hotel Chocolat offering higher-yielding bonds to the public to fund their expansion?

The trouble is, untrammelled by effective regulation, they have morphed into a monster.

As this newspaper has repeatedly documented, firms raising money on dubious, if not fraudulent grounds, have jumped in on the act.

They’ve taken probably billions of pounds from the public with little likelihood of repaying the money, let alone making good on promises of 8% returns.

The tales of the victims, often naive and elderly, are heartbreaking.

After years of unheeded warnings, the FCA is belatedly clamping down on the ads these firms have been placing. But it can only act against those whose it regulates; the rest will continue unabated.

This is crazy.

The Treasury must overhaul the system so no financial products can be sold to the public without being regulated.

No loopholes. No exceptions.

The FCA should be notified of ads before they’re published, as with many other financial products. Currently, the regulator has to spot them after they pop up across Google, Facebook and the rest, bashing them in a high-stakes whack-a-mole.

Self-styled “financial innovators” will grumble, but the current free-for-all has gone horribly wrong. Today’s sticking plaster must be followed up with more radical surgery.